Shares of MiMedx Group (MDXG 1.58%) are up 32% at 12:51 p.m. EDT after its board of directors reached an agreement with one of the company's largest shareholders, Prescience Point Capital Management, to revamp the wound-care company's board.
Six new directors will be nominated. Three of them are Prescience Point's nominees, including the new chairwoman, M. Kathleen Behrens Wilsey. MiMedx's new CEO, Timothy R. Wright, is also included in the board refreshment.
MiMedx has had a rough year or so: It included a U.S. Department of Justice investigation, multiple executives resigning simultaneously, and a delisting from the Nasdaq.
Investors are clearly hoping this board refreshment is a sign that the company can turn things around. Prescience Point has been known to open short positions in companies, so the fact that the investment fund is backing the company and not turning against it is a good sign that at least one large investor thinks there's some value left to be had.
While the board refreshment is a good start, it's hard to know how quickly MiMedx can fix its internal issues. With many unknowns, MiMedx remains a risky investment even if it is substantially cheaper than it was a year ago.
The company also has to get the new board past shareholders. Former CEO Parker Petit has nominated himself and two others to the board, so there may be a proxy fight coming. Of course, based on investors' enthusiasm today, garnering the votes to seat MiMedx and Prescience Point's slate seems like the easy part of the turnaround.